By Lynn Thomasson and Yoshiaki Nohara - Jan 17, 2012 2:19 PM GMT+0700
Jan. 17 (Bloomberg) -- Wang Tao, a Hong Kong-based economist for UBS AG, talks about the China economy and the nation's central bank monetary policy. China’s economy expanded at the slowest pace in 10 quarters as export demand moderated and a prolonged campaign against consumer and property-price gains cooled growth. Wang speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
Jan. 17 (Bloomberg) -- Lu Ting, a China economist at Bank of America-Merrill Lynch in Hong Kong, talks about the outlook for China's economic growth. Ting speaks with Rishaad Salamat, Susan Li, Zeb Eckert and Mia Saini on Bloomberg Television's "Asia Edge." (Source: Bloomberg)
Asian shares rallied the most in almost a month as metals and the South Korean won rose after China’s slowest economic growth in more than two years bolstered expectations for easier monetary policy and French borrowing costs declined.
The MSCI Asia Pacific Index advanced 1.8 percent as of 4:17 p.m. in Tokyo, erasing a 1.1 percent drop yesterday. The Shanghai Composite Index jumped 4.2 percent. Euro Stoxx 50 Index futures climbed 1.2 percent, while contracts on the Standard & Poor’s 500 Index added 0.8 percent. The won gained against 15 of its 16 major peers and the euro rose 0.7 percent. Copper gained 1.9 percent to the highest price since October. Soybeans and corn advanced for the first time in a week.
Gross domestic product in China, the world’s second-largest economy, rose 8.9 percent in the fourth quarter from a year earlier, the statistics bureau said in Beijing. France sold 1.895 billion euros ($2.4 billion) of one-year notes at a yield of 0.406 percent yesterday, down from 0.454 percent on Jan. 9. The sale was the first since Europe’s second-biggest economy lost its AAA credit rating at Standard & Poor’s last week.
“There’s a bias in China right now for more policy easing,” said Andrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages $150 billion. “We are hearing China’s senior leadership is very, very concerned about the outlook in Europe.”
French Bond Auction
The euro advanced to $1.2749 following two days of losses. The European Financial Stability Facility, Greece and Spain are scheduled to sell debt today. Standard & Poor’s cut the rating of the euro-region bailout fund to AA+ from AAA after European markets closed yesterday. U.S. equity and bond markets were closed yesterday for the Martin Luther King Jr. holiday.
Investors will be watching fourth-quarter earnings from Wells Fargo & Co. and Citigroup Inc. today. Economic reports may show manufacturing in the New York region expanded and German investor confidence improved, based on the median economist forecast from surveys compiled by Bloomberg.
S&P 500 companies, which beat profit estimates in the previous 11 quarters, are forecast to report a 4.6 percent increase in per-share earnings during the September-December period, according to projections compiled by Bloomberg.
More than six stocks rose for each that fell in the MSCI Asia Pacific Index (MXAP), which has rallied 9.5 percent since a two- year low in October. Hong Kong’s Hang Seng Index (HSI) jumped 2.4 percent and the Nikkei 225 Stock Average added 1.1 percent.
China Growth
“China demand is now very important for the Asian region,” said Caroline Maurer, a Singapore-based fund manager at Henderson Global Investors Ltd., which managed $100 billion as of Sept. 30. “Policy makers now have more room to drive growth by loosening monetary policy.”
Energy companies and raw-material producers rose the most among 10 industries in the MSCI Asia gauge. Cnooc Ltd., China’s largest offshore oil producer, and Jiangxi Copper Co., the nation’s biggest producer of the metal, climbed more than 3 percent in Hong Kong.
Paladin Energy Ltd. surged 12 percent, the most in three months. The Australian uranium producer reported a 24 percent gain in output and predicted an increase in prices for the nuclear fuel.
Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second- biggest bank by market value, rose 1.2 percent after winning a bid to buy Royal Bank of Scotland Group Plc’s aircraft-leasing division for about $7.3 billion.
Copper, Gold
South Korea’s won climbed 0.8 percent to 1,146.15 per dollar. The Australian dollar rose 0.7 percent to $1.0384. The yen retreated from near an 11-year high against the euro, falling 0.4 percent to 97.61 per euro.
Copper for three-month delivery rallied 1.8 percent. It climbed as much as 1.9 percent to $8,240.25 a metric ton on the London Metal Exchange, the highest intraday level since Oct. 28. Spot gold added 0.9 percent to $1,658.35 an ounce.
Gold may climb and copper is the most-favored base metal for 2012, according to Morgan Stanley, which said that investment demand will bolster bullion, while a deficit will benefit the raw material used in pipes and wires. The New York- based bank is bearish on lead, nickel, aluminum and zinc amid surpluses, Melbourne-based analysts Peter Richardson and Joel Crane said in a report today.
March-delivery soybeans climbed 1.5 percent to $11.76 a bushel on the Chicago Board of Trade. The price dropped 3.2 percent last week. Corn for March delivery rose as much as 1.3 percent to $6.0725 a bushel, after slumping 6.8 percent last week.
Bond Risk
Corn and soybean crops in Brazil’s southernmost state of Rio Grande do Sul will be harmed by further dry weather in the next 10 days, forecaster Somar Meteorologia said yesterday.
The cost of insuring Asia-Pacific bonds against non-payment fell, according to credit-default swap traders. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped 3 basis points to 202.5, Royal Bank of Scotland Group Plc prices show. The measure is set for the lowest level since Jan. 13, according to CMA, which compiles prices quoted by dealers in the privately negotiated market.
To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net
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